- CFA Exams
- CFA Exam: Level I 2021
- Study Session 2. Quantitative Methods (1)
- Reading 8. Probability Concepts
- Subject 8. Portfolio Expected Return and Variance

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**CFA Practice Question**

Assume a portfolio with 35% stocks (S), 35% bonds (B), and 30% in a mutual fund (F). The expected return from stocks is 12%, the expected return on the mutual fund is 7%, and the expected return from bonds is 5%. What is the expected return on this portfolio?

B. 8.05%

C. 8.15%

A. 8.00%

B. 8.05%

C. 8.15%

Correct Answer: B

The expected return for the portfolio is calculated as follows: E(R) = 0.35 x 12 + 0.35 x 5 + 0.3 x 7 = 8.05%

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**User Contributed Comments**
5

User |
Comment |
---|---|

BayAreaPablo |
Watch out for the E(Mutual Fund) = 7% and E(Bond)=5%. If you switch these (due to fast reading) you will get 8.15%. |

joe3 |
should be careful during the test. I got the 8.15% :-( |

surob |
Luckily, I got it right. Good one for the practice |

AUAU |
Watch out. CFA exam may like this. |

hemraj007 |
lol i got this 8.15% |